In recent months rumours swirled that Jeremy Hunt would use the Autumn Statement to abolish or at least cut inheritance tax. And we were listening.
Inheritance Tax is not an ideal tax, and it’s unpopular with some, but it’s the only real tax on accumulated wealth we have. Only the top 5% of estates pay it.
Abolishing it would fuel rampant inequality in the UK.
For this reason we support a reformed inheritance tax – you can read more about why here.
We’ve been all over the media in recent weeks pushing back.
Our Head of Advocacy and Policy, Rachael, made the case for keeping inheritance tax on GB News last week.
The super rich should be paying more tax, not less, Rachael argued on Times Radio on Monday.
The same day she was also on The Jeremy Vine show on BBC Radio 2 making the case that the public are desperate for better public services – and taxing wealth more can help us get there.
We teamed up with the Trades Union Congress and had a full-page splash in The Mirror, demanding the Chancellor prioritise public services over inheritance tax cuts.
And our polling that found only 1 in 4 supported tax cuts over public investment was featured in The Guardian.
We fought and won
When Jeremy Hunt stood up in the House of Commons to read his statement yesterday, he didn’t mention inheritance tax once.
The government backed down. There is to be no change to inheritance tax.
They were forced to abandon their rumoured plan to help the already wealthy at the expense of everyone else - for now at least. We helped do that.
He reduced National Insurance
Instead Hunt set out plans to reduce National Insurance contributions for employees.
The plan will see National Insurance contributions for many working people reduced from 12% to 10% – a saving of about £450 a year for the average person. It will affect around 27 million people.
The cut to National Insurance was by far the most eye catching announcement in the Statement. And it may help the Conservatives prospects at the next election.
He ignored the crises battering the UK
But let’s be honest, this small injection of cash into peoples’ pockets won't change the multiple crises facing the UK.
Hospital waiting lists are surging and staff are absolutely burnt out – while our schools literally fall apart.
A crisis in housing sees millions residing in unlivable conditions – while local councils struggle to provide even basic services, and some face bankruptcy.
The tax cut announced yesterday may even aggravate the situation. As I tweeted, the £20bn giveaway will effectively be "paid for" by £20bn of spending cuts planned for after the election. These cuts will be almost impossible to deliver, setting a trap for whoever forms the next government.
The UK isn’t working for most ordinary people, and the Chancellor had no plan to address this – the planned spending cuts will only make things worse.
How to fix our country
To properly tackle the challenges everyone in the UK faces, the government needs to invest more in the NHS and all the different public services we rely on – from schools to transport; our police and emergency services.
We don’t want taxes on working people to go up. The money can come from those who are not already shouldering their fair share of the burden: the super rich.
If we taxed the income of the super rich at the same rate as work – and if we taxed them 1% a year on their accumulated assets, we could raise £50 billion a year.
We could also raise an extra £7 billion a year by closing just a handful of unfair tax loopholes.
This could be the boost to bring new life into our creaking NHS and public services.
The wealth is here in the UK right now to fix these problems. All we need is a government disciplined enough to go out and tax it.
The government could raise over £7 billion a year for vital public services by closing unfair tax loopholes, according to new Tax Justice UK research.
The situation facing the Chancellor on the eve of his Autumn Statement is stark. The NHS is perpetually in crisis, school buildings are crumbling, and people are struggling with a severe cost-of-living crisis with another unaffordable winter looming. Public finance solutions are needed more urgently than ever, particularly with the growing demand for increased spending on public services.
Tax Justice UK analysis demonstrates that closing just five tax loopholes, which benefit wealthy individuals and multinational companies, could raise over £7 billion a year. To give a sense of the scale of this subsidy, this could pay for all nursing and teacher vacancies across the UK with change to spare*.
These revenue-generating recommendations are put forward ahead of the Chancellor’s Autumn statement to offer feasible, pragmatic solutions to mounting crises. The policies have widespread support from economists, academics and respected think-tanks - including the Institute for Fiscal Studies (IFS) and The Resolution Foundation. Considering there are multiple tax loopholes that would benefit from being closed, these five are just a snapshot of the options available to Jeremy Hunt.
These five recommendations show that there is money available to tackle the urgent issues facing ordinary people.
Instead of sinking into fatalism and apathy, the Chancellor should use his Autumn Statement to raise urgent revenues and tackle NHS waiting lists and declining living standards.
1. End fossil fuel subsidies for oil and gas companies to raise £4.4 billion a year
Despite oil companies’ record profits since the war in Ukraine, the UK taxpayer continues to fund a loophole for the industry that the IFS has characterised as a "huge tax subsidy”. This is because the ‘windfall tax’ (Energy Profits Levy) implemented by the government contains “indefensibly generous” investment allowances. This loophole enables oil companies to claw back roughly £45 for every £100 spent on new UK oil and gas projects. This costs the taxpayer approximately £2 billion a year**. Additionally, Oxfam estimates taxpayers subsidise oil and gas companies in the North Sea for activities such as exploration and decommissioning to the tune of £2.2 billion. The UK taxpayer should not be footing the bill for polluting, highly profitable fossil-fuel companies, nor their cleanups. These climate-wrecking incentives must be shut down by the Chancellor as a priority not just to boost Treasury coffers but to speed up the transition to a low-carbon economy.
2. End classic car exemption to raise £130 million a year
Vehicles constructed more than 40 years before the 1 January of any year are exempt from paying vehicle excise duty. This subsidy for classic cars is a bizarre tax break, which highlights the inequities that have crept into the UK’s unwieldy tax system. At a time when people can’t afford to make ends meet, taxpayers should not subsidise an arbitrary tax break for a polluting hobby that could pay for over 3500 new nurses’ salaries a year.
3. End video games tax relief to raise £197 million
Video Games Tax Relief (VGTR) cost a record £197 million in 2022. Despite being designed as a relief to help independent developers produce “culturally British” games, evidence shows it is large, often multinational firms that are benefitting. HMRC data shows that claims over £500,000 account for 88% of the total amount paid out. And one big company in particular seems to benefit from the lion's share: US-owned company Rockstar, who produce Grand Theft Auto, revealed it obtained almost £80 million in VGTR in 2021-2022 - 41% of all VGTR paid out in the UK.
4. Close capital gains tax loopholes to raise £1.1 billion a year
‘Business Asset Disposal Relief’ is a tax break that lowers capital gains tax from 20% to 10% on the first £1 million of gains, when a person sells their company. This loophole has come under repeated criticism, including from think-tanks The Resolution Foundation and the IFS. There is little evidence that this tax break affects entrepreneurial activity, and the prospect of slightly lower taxes at the end of a person’s involvement with a business is not well-targeted in a business’ lifecycle, according to The Resolution Foundation. Considering there is an extremely strong consensus amongst economists and think-tanks around bringing capital gains tax in line with income tax at 40% (this is also one of Tax Justice UK’s six wealth tax policies), it is indefensible that a loophole further enables a carve out to a mere 10%. There is no sound reason why a person earning their income from selling a profitable business should pay a far lower tax rate than a person paying tax on their wages.
5. Close inheritance tax loopholes to raise £1.7 billion a year
Inheritance tax has a multitude of loopholes that enable wealthy estates to engineer their finances to avoid paying their fair share. This is evidenced by the fact that estates worth over £10 million pay an effective average tax rate of just 10% despite a headline IHT rate of 40%.
The Chancellor should also reform ‘business’ and ‘agricultural property’ inheritance tax reliefs, which could raise £1.5 billion a year. Evidence shows a small minority of very wealthy estates use these loopholes to avoid paying their full rate of inheritance tax. While abuse of agricultural property relief is pushing up the price of agricultural land, pricing poorer farmers out of the market. The Resolution Foundation, IPPR and the IFS have all put forward alternative policy designs, most recently with the IFS’s suggestion to cap business relief at £500,000, which we have used to calculate our revenue figure.
The Chancellor should remedy the fact that pension wealth is exempt from Inheritance Tax, which could raise £200 million a year. This enables heirs to receive a ‘defined contribution pension’ tax-free if the deceased dies before they are 75. This creates a bizarre imbalance, with inherited pensions benefitting from more favourable tax treatment than when they are used to fund retirement. It also distorts behaviour, creating an incentive for wealthy individuals to avoid drawing down on their pension, if they have other resources available. Economists have also raised particular concerns since pensions already receive significant tax advantages.
These recommendations sit alongside Tax Justice UK’s more ambitious policies for long term tax reform, outlined in our six wealth tax policies to raise £50 billion.
To see full citations and calculations, please click here.
Our climate is changing before our eyes. Flooding has killed seven people and forced hundreds more from their homes in the UK in recent weeks. While Italy braces for yet more extreme weather.
Torrential rain has become a regular occurrence for many of us. And another storm is already wreaking havoc in the south of England as I write.
This is just a taste of what’s to come. Our climate is changing and our weather is becoming increasingly unpredictable – and hostile, in many cases. Do we really want to accept this as our future?
More bumper profits for oil companies
In the context of climate breakdown, it’s deeply frustrating to see it’s simply business as usual from big oil companies.
Today Shell announced another round of huge profits: they made £5 billion profit between July and September alone.
On Tuesday BP posted a £2.7 billion profit in the same period of time.
It’s not only that the big fossil fuel companies are making huge profits in a time of climate breakdown – but also what they are doing with these profits.
BP, for example, has invested nine times more into new fossil fuel extraction than they have in developing renewables over the past two years, research from the IPPR shows.
While Shell will use half of its £5 billion profits announced today to buyback shares, to boost their stock price.
It can’t be business as usual
Meanwhile the government and the Labour party have both rowed back on their commitments to reduce the UK’s emissions.
We can’t accept business as usual. We demand our politicians take action before it is too late.
That’s why we’re pushing for a bigger windfall tax on oil companies profits – and a tax on share buybacks.
This money could be used to invest in green energy, better public transport and, overall, a fair green transition.
Taxing excess profits of fossil fuel companies can only go so far. To achieve more systemic change, we need a wider transformation of our tax system to tackle environmental and climate breakdown.
Tax the super rich and big polluters
Those who emit the most carbon – generally super rich individuals and fossil fuel companies – must also be incentivized to reduce their impact.
Taxing their carbon emissions would do this and would raise significant sums that could, again, be invested in a fair green transition.
We saw a big success in this campaign recently, when Oxfam came out in favour of taxing polluters fairly.
The Conservative donors who own the JCB digger company may be hit with a £500 million tax bill according to the Guardian.
HMRC has been investigating brothers Anthony and Mark Bamford’s extensive offshore business empire for over three years.
The Bamfords are alleged to have aggressively minimised the payment of UK taxes. HMRC may seek to recoup large sums of lost tax if the allegations are proven correct.
In September a Labour MP asked the Conservative Party if they would return £10 million donated to them by JCB.
JCB were also recently spotted at the Labour Party conference, exhibiting along with many other businesses on the conference floor.
£42 billion in missing tax
JCB is just one multinational company operating in the UK. The obvious question is: to what extent might other big companies be aggressively minimising their taxes?
The responsibility for answering this question lies with the UK’s tax authority, HMRC.
Yet the Revenue is woefully under-resourced for the job at hand. Earlier this year MPs slammed the government for underfunding the tax authority.
Members of Parliament’s Public Accounts Committee said HMRC did not have enough staff to properly investigate underpaid tax. And estimated that up to £42 billion could be missing in unpaid tax.
Parliament also said that for every £1 invested in HMRC investigations, £18 was recovered in additional tax.
Global tax avoiders
Aggressive tax avoidance extends beyond the UK, of course – and may help explain how just 2,756 individuals have amassed over £13 trillion of wealth between them.
These are the billionaires. And they are paying on average between 0 and 0.6% tax on their wealth, a stark new report showed this week.
Using tax loopholes, shell companies and profit shifting, the world’s three thousand richest individuals have been operating on “the borders of legality”, the report from the EU Tax Observatory argues.
The Tax Observatory – which was set up to steer EU tax policy – argues a 2% annual tax should be introduced on billionaires’ wealth. They say it could raise £250 billion annually.
It’s encouraging to see a major tax body back wealth taxes on the super rich. Our own research shows up to £50 billion a year could be raised in the UK alone through higher taxes on wealth.
Beyond wealth taxes, loopholes for billionaires and multinational companies must be closed – and our tax authorities properly resourced to scrutinise them properly.
Rebuilding our broken society
This is not simply a question of fairness and transparency, but one of an unequal and broken society.
3.8 million people in the UK are living in destitution. They can’t afford to meet their most basic needs for shelter, food or energy. That’s the shocking finding of an investigation by our friends at the Joseph Rowntree Foundation this week.
This is a disgrace. Our politicians should hang their heads in shame. The safety net we all rely on if we fall on hard times is totally failing nearly 1 in 10 people in the UK.
But something can be done. There is money available to fix these problems, as our executive director Robert Palmer told Times Radio this week.
We can renew our broken society, taking more from the very very rich and repairing our NHS and public services.
HMRC may have missed out on up to £2 billion in tax from just seven big tech firms shifting their profits out of the UK.
This week our friends over at TaxWatch investigated the potential lost tax revenue in the UK in 2021 from seven major United States tech companies.
TaxWatch poured over the accounts of a number of companies including Amazon, Microsoft, and Apple. TaxWatch estimated how much tax these companies may have been liable to pay to HMRC had they declared profits at the same level they do globally.
The findings amount to £2 billion in potentially missed tax. Only a fraction of this figure, just £758 million, was actually paid to HMRC. This is on estimated UK profits of £14.8 billion. The companies say that they comply with the relevant tax laws.
Put into context, £2 billion could pay for more than 50,000 nurses, or over 40,000 classroom teachers for a year.
Smoke and mirrors
Complicated corporate structures, offshore schemes and favourable tax systems allow companies like Amazon and Apple to boost their bottom line while our schools scratch around for funding.
Given the lack of transparency about where companies make their money, and where they pay their taxes, it’s very difficult to get an accurate picture of what’s going on.
When our NHS is on its knees, schools are crumbling and public services are cut to the bone, it is inexcusable not to clamp down on multinationals that shift their profits elsewhere.
By Robert Palmer, Executive Director Tax Justice UK
I’ve just got back from the Labour Party conference in Liverpool, where I was making the case for a fair tax system.
I was joined by my colleague Rachael Henry, our Head of Policy and Advocacy. She was also at Conservative and Lib Dem conferences talking to politicians of all stripes.
In Liverpool we met countless MPs, policymakers and journalists and pushed our message: that raising taxes on the super rich could fund a transformation in our NHS, public services and society.
I was struck by how often wealth taxes came up. Almost every session we went to had someone asking about taxing wealth. The pressure on Labour is growing. This is a real sign of progress. Our campaign to change the public and political debate on tax is working.
Keir Starmer, the Labour leader, used the conference to set out his vision for the country. He talked about the power of government to make people’s lives better. The Labour leader also doubled down on his commitment to tackle the climate crisis.
Promising investment in the NHS, schools and green energy, alongside a massive programme of housebuilding, Starmer tried to draw a clear dividing line between Labour and Conservatives.
Our schools are crumbling, NHS waiting lists surging, councils are going bankrupt all over the country. People are fed up and desperate for change.
But while there were nods towards Labour’s past achievements, and a promise to rebuild Britain, there wasn’t much detail from Starmer on how this would happen. Some of this is to be expected a year out from the general election. But it did leave me wanting more.
Where could Labour raise new revenue?
The public realm is heading towards ruin. We need a plan to save it. We need major investment of public money over several years in our services to keep them running, and make them fit for a modern, future Britain.
The question is does Starmer have a plan to save our NHS and public services?
Labour has some excellent individual policies – like clawing back £7 billion lost in Covid fraud, ending non-dom status and applying VAT on private schools.
But the tax rises that Labour has promised so far add up to just £5 billion a year. Given that the NHS budget alone is £180 billion a year, this won’t touch the sides.
At Tax Justice UK, we’ve set out six wealth tax policies that could raise up to £50 billion a year. This would go a long way to rebuilding Britain.
Labour could go further on their plan to tackle fraud as well. About 5% of the tax owed each year isn’t being paid. That adds up to at least £42 billion in missing tax. It could be recouped if HMRC were properly resourced.
On the train home I was left feeling that Labour is too afraid to talk about raising and investing the huge amounts of additional money necessary to make good on their transformational vision.
Yesterday Rishi Sunak delivered an hour-long speech at the Conservative conference setting out his agenda. I was struck by the prime minister’s lack of vision. He failed to properly address the huge challenges facing the UK.
NHS waiting lists are growing and growing, while our schools literally fall apart. The cost of living crisis is throwing millions into poverty and turbocharging inequality; while climate breakdown becomes ever more obvious to all.
Where were the solutions, the vision for the future? I couldn’t see it.
To be fair, this lack of serious vision isn’t a failure only of the Conservatives. Labour’s leadership are also, putting it as politely as possible, tight-lipped on how they would solve the serious challenges facing the UK.
Fairer taxes can help build a brighter future
In this vacuum of political leadership, it’s never been more important for us to shout as loud as we can that there are solutions to these problems – that things can be done. That there is money to invest in our futures.
We know the government has options. The UK could raise up to £50 billion extra a year by closing tax loopholes used by the super rich – and by taxing wealth more.
Redirecting the massive private wealth of the super rich into our grassroots public services would reduce wealth inequality: taking from the rich and giving to ordinary workers.
Taxing the super rich could also reduce gender inequality. A fascinating new report by the Women’s Budget Group (WBG), which we fed into, shows how men have on average 35% more wealth than women – it argues that taxing wealth more could help redistribute this and level the gender playing field. You can read more about our work on tax and gender with the WBG here.
Politicians could also introduce new taxes on the biggest polluters – oil companies and polluting corporations – raising billions of pounds every year.
This money could help fund a fair green transition: new renewable projects and better public transport, creating high quality jobs in the process.
People want action now
These options – to raise more revenue from the super rich and the super polluting – are all open to the government, and the public support them.
A new report from our friends at the IPPR last week shows exactly this: people support higher taxes if that money is spent on public services.
Our executive director Robert was on Sky News last week arguing that the public do not want to see more austerity.
A year on from her economy-crashing 44-day premiership, Liz Truss and her faction in the Conservative Party are making a comeback.
These tax-cutting, small state libertarians want to see lower taxes to benefit the rich and reduced public services to the detriment of the rest of us.
They’ve been all over the media, focusing their efforts on attacking one tax in particular. They are lobbying the Prime Minister to abolish it. The tax in question? Inheritance tax.
Inheritance tax is described as one of the most unpopular taxes in the UK – the most unpopular tax by some accounts.
However, I’m going to try to convince you that inheritance tax, although flawed, is worth defending against the tax cutters.
Because there’s a greater issue at stake here: inheritance tax raises significant revenue for our public services. At a time when our NHS, schools and other services are stretched to their capacity, it would be reckless to cut their funding.
Will you have to pay inheritance tax?
Let’s start with some facts about inheritance tax. Firstly, hardly anyone pays it. More than 96% of estates never pay inheritance tax. Although one in three people think they will have to pay it. This gap between perception and reality may partly explain the tax’s unpopularity.
In reality, because of tax free thresholds and allowances, the vast majority of people can pass on up to £1 million to their children and grandchildren without paying any tax. Read the facts about inheritance tax on our blog.
Secondly, abolishing inheritance tax would only benefit a small number of wealthy people: let’s not mince our words, it would be a tax cut for the rich.
This week the Institute for Fiscal Studies estimated that if inheritance tax was scrapped, half the benefit would go to the top 1% of wealth holders, who would get an average of £1 million each in tax savings.
Inheritance tax funds our public services
My final point is this: inheritance tax raises important revenue for our public services. Currently it brings in about £7 billion a year. Forecasts estimate this will rise to £15 billion in ten years.
Large numbers can sometimes seem vague or even meaningless, so let me put these into context. £15 billion a year is half of the UK’s day-to-day defence budget; it is nearly 20% of the UK’s education budget. That’s a massive amount of money when schools are crumbling and you can wait weeks for a GP appointment.
Inheritance tax raises significant revenue for our public services. If it is abolished, it’s very likely that the money will have to be found from elsewhere (likely from higher taxes on working people), or that public services will have to be cut. I think you’ll agree that most people would support neither option.
We’re pushing back against the tax cutters
I understand that people have strongly held views on inheritance tax, especially as it is paid at a particularly difficult time for people as they’ve just lost a loved one. I do hope I have explained clearly why we at Tax Justice UK support it. We need to reform inheritance tax, not scrap it.
Our Executive Director has been on TV in recent days defending inheritance tax, and pushing back against the tax cutters. I was on TalkTV with Julia Hartley Brewer on Monday, you can watch the interview in full:
There’s a shorter version of the interview here on Twitter. We’d appreciate it if you could retweet it if you agree.
Our Head of Advocacy and Policy, Rachael Henry, was also on LBC with Iain Dale pushing back against abolishing inheritance tax. You can listen here.
Our campaign to tax the most polluting companies and super rich individuals – and invest that money in renewables and the green transition – is growing.
This week Oxfam came out in favour of taxing the UK’s biggest polluters, citing our research.
They want to see fossil fuel companies and the super rich pay much higher taxes. The charity estimates this could raise £23 billion a year. We fully back their call.
This money could be invested directly into the green transition: in renewable energy and public transport infrastructure, creating high quality jobs in the process.
A tax on emissions would ensure the wealthiest and biggest polluters pay the most for tackling climate change. It’s so important to avoid the bulk of the cost of dealing with the climate crisis falling on ordinary people.
As the catastrophic effects of environmental and climate breakdown become clearer, it’s never been more urgent that we bring more and more partners onboard with our campaign.
A huge civil society group like Oxfam coming out in favour of taxes to help deal with climate change is a big step in the right direction.
We also joined together with 400 businesses and civil society groups yesterday to push back against Rishi Sunak’s plans to water down the UK’s net zero policies. You can read the letter here.
We have the ear of MPs
Not only are we building coalitions with big partners, we’re also making inroads with MPs.
We regularly meet with senior politicians to make the case for a fair approach to tax and climate.
Our Executive Director Robert Palmer is also on TV and radio, promoting our message – and pushing back against those defending fossil fuel giants.
If you didn’t see it, Robert was on GB News last week debating Jacob Rees-Mogg on why a windfall tax on highly profitable North Sea oil and gas companies is a good idea.
This is the work we’re doing week-in, week-out: building movements and partnerships – and spreading the message about progressive tax reform in the media, with politicians and the wider public.
One of the UK’s most powerful union leaders is piling pressure on Labour to back higher taxes on wealth.
This week Paul Nowak, general secretary of the Trade Union Council’s (TUC), suggested that a “modest tax on the wealthiest 0.3 per cent of individuals” could raise £10bn a year for public services.
Nowak said: “Labour have already set out what they’ll do on clamping down on non-doms… But we think that conversation needs to go further.”
“With living standards plummeting, public services on their knees, and rampant wealth inequality blighting every corner of the country . . . fair taxation must be a key part of a wider set of policies to help reset the economy to work for working people.”
We can convince Labour
The TUC and its constituent unions represent millions of workers, so Labour will not be able to easily ignore Nowak’s comments.
The public supports what Nowak is saying. New polling shows that 61 per cent of people support higher taxes on wealth.
If Keir Starmer and Labour make it into office at the next general election, they will face public services in an existential crisis.
To truly stop the slide, Labour will need to spend more on public services. According to the party’s own rules, this will probably mean higher taxes. Raising income tax, or other taxes on ordinary households, will be politically difficult – and highly unfair during a cost of living crisis.
Wealth taxes on the super rich, those who can afford to pay a bit more, will be one of their only options.
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